Commodity prices might be heading towards the final drop of the year. This might be due to economic slowdown in china and also a strong dollar in anticipation of a rate hike. Strong USD is very bad for commodities because most commodities are priced in USD. If the FED should raise the rate on or before the end of the year as the market seems to be pricing-in already, then USD will get strong and this will weigh down on commodity strength.
Technically, we saw a rally on oil from $37.88 to 49.28. This is a confirmation of a lower low to a lower higher. Prices are expected to make a new lower low which could be below $37. Gold followed a similar technical pattern; we saw a lower low of $1098 and a rally to $1156. This gives another opportunity for another lower low to less than $1000. This is expected over the next couple of trading sessions.
Furthermore, the upcoming Non-farm payrolls (NFP) might actually accelerate the pace at which prices might go to the dips. If we see a strong NFP on Friday, we might see a strong USD which will weigh down on commodity prices
The charts below shows the price of oil and Gold
Fig 1: Oil
Fig 2: Gold chart